Isabella Mariam

The High Court of Madras Single Bench of Justice N. Mala dismissed a writ petition challenging the cancellation of an appointment to the post of Circle Based Officer (CBO) in the State Bank of India. The Court held that the petitioner, who had a poor credit history reflected in the CIBIL report, was ineligible for appointment under the terms of the recruitment notification. The judgment clarified that repayment of loans before the issuance of the appointment order was insufficient to overcome disqualification arising from adverse credit records.

In a comprehensive order delivered on 02.06.2025, the Court concluded that the petitioner was not entitled to relief as the recruitment criteria unambiguously excluded candidates with default records or adverse reports from CIBIL or other agencies. The writ petition seeking to quash the cancellation and reinstate the appointment was thus dismissed. The court found no merit in the arguments concerning discrimination or post-facto compliance. All contentions by the petitioner were overruled in light of explicit eligibility conditions and the Bank's recruitment policy. Consequently, the connected miscellaneous petition was also closed with no order as to costs.

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The petitioner, having applied under the OBC category for the position of Circle Based Officer (CBO) as per the recruitment notification issued on 27.07.2020 by the State Bank of India, cleared all stages of the selection process, including written examination, interview, medical test, document verification, and background checks, and was issued an appointment order dated 12.03.2021.

The appointment process included verification of the candidate's CIBIL report, which was generated on 12.03.2021 and verified by the respondents on 16.03.2021. Following this verification, the petitioner was asked to submit an explanation for issues raised in the CIBIL report regarding belated repayment of loans. The petitioner provided an explanation on 01.04.2021 and submitted updated credit documentation. Despite this, the Assistant General Manager (HR) issued an order dated 09.04.2021, cancelling the appointment on the ground of adverse credit history.

The petitioner filed a writ petition under Article 226 of the Constitution of India seeking to quash the cancellation and to direct the respondents to permit him to join duty as CBO. The petitioner contended that he had repaid all loans and credit card dues prior to the notification and that no outstanding amounts existed at the time of application. He asserted that the CIBIL report did not classify him as a defaulter and that the cancellation was therefore arbitrary and illegal.

The petitioner also claimed that there was discrimination in his case, as other similarly placed candidates who had defaulted in the past but repaid their dues were allowed to join. He further referred to a subsequent circular dated 24.06.2022 to support his claim that repayment before joining should have rendered him eligible.

In response, the respondents submitted a detailed counter and additional counter affidavit. They cited Clause 1(E) of the recruitment notification, which explicitly stated: "Candidates with record of default in repayment of loans/credit card dues and/or against whose name adverse report of CIBIL or other external agencies are available are not eligible for appointment."

The respondents pointed out that the petitioner failed to maintain a clean credit record and thus fell within the disqualification criteria. They submitted that the recruitment policy included this clause to ensure financial discipline among prospective employees handling public money.

The respondents relied on a CIBIL report dated 12.03.2021, which outlined multiple instances of financial indiscipline:

1. Personal loan of Rs. 1,30,000 obtained on 31.08.2018 showed irregular repayments between November 2018 and July 2019.

2. Another personal loan of Rs. 90,000 obtained on 27.06.2018 was irregular from December 2018 to April 2020.

3. A further personal loan of Rs. 1,50,000 had an overdue of Rs. 2,770.

4. HDFC credit card dues remained unpaid from January to October 2019 and were written off, resulting in a loss of Rs. 40,000 to the institution.

5. A second credit card had irregularities for 37 days during March to April 2019.

6. Over 50 credit enquiries between 2016 and 2021 were considered evidence of financial indiscipline.

The Bank cited a letter dated 20.03.2021 from its Central Recruitment Department, which clarified that candidates with minor disputes or overdue payments of less than Rs. 5,000, or one EMI default, could be allowed to join. The respondents asserted that the petitioner's case did not fall within these permissible exceptions.

The additional counter included that even if an appointment letter was issued, joining was contingent upon satisfactory CIBIL verification. The petitioner, according to the Bank, failed to meet this condition.

Justice N. Mala recorded that "On a reading of the above clause, it is crystal clear that what is required is not the repayment of the loans as on the date of notification but maintaining a clear record of repayment of loans, without any default and/or not having an adverse CIBIL report or of other external agencies."

The Court examined the CIBIL report and observed: "The loan was written off by the credit institution and Suit was filed against the candidate for recovery of the loan. This is a clear evidence of his financial indiscipline."

"Though he was able to repay, he was wilfully defaulted the loan repayment."

Regarding the explanation offered by the petitioner, the Court recorded: "The petitioner clearly admitted his default in repaying the personal loans and therefore in my view, the respondent-bank cannot be faulted for invoking Clause 1(E) of the Notification."

On the petitioner’s argument interpreting Clause 1(E), the Court found: "The explanation now sought to be given by the petitioner that the said clause should be read to mean that, on the date of notification there were to be no dues or default in repayment of loans/credit card dues cannot be endorsed, as it goes against the letter of the clause."

Quoting from the Supreme Court decision in Chief Manager, Punjab National Bank vs. Anik Kumar Das, the Court recorded: "Once having participated in the recruitment process as per the advertisement, thereafter it is not open for him to contend that acquisition of higher qualification cannot be a disqualification and that too when he never challenged the eligibility criteria."

The Court also noted the rationale of the eligibility criteria: "In banking business, the employees deal with public money and therefore financial discipline needs to be strictly maintained. Further there must be efficiency in handling public money and obviously a person with poor or no financial discipline cannot be trusted with public money."

On the petitioner’s reference to the later circular dated 24.06.2022, the Court clarified: "The said circular...does not relate to the petitioner’s advertisement...Therefore, the reliance placed by the petitioner’s counsel on the said circular is erroneous and untenable."

Addressing the claim of discrimination, the Court held: "Only those candidates who satisfied the requirement in the circular dated 20.03.2021, alone would be allowed to join duty...the petitioner cannot take advantage of the said circular."

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The Court issued the following direction in its conclusion:

"In view of the foregoing discussions, I find no merits in the writ petition and hence, the same is liable to be dismissed. Accordingly, the writ petition is dismissed. No costs. Consequently, connected Miscellaneous Petition is closed."

The dismissal followed the Court’s determination that the petitioner had not challenged Clause 1(E) of the recruitment notification and could not now seek an interpretation favourable to him. The petitioner's claim that the cancellation was illegal was rejected on the basis that the eligibility conditions were clearly defined and known to all applicants.

Additionally, the Court found that the policy of excluding candidates with adverse credit histories served a valid objective within the banking sector, and interference with such criteria under Article 226 was unwarranted. The Court found the SBI’s decision to cancel the appointment fully consistent with the recruitment notification and not arbitrary.

Advocates Representing the Parties:

For the Petitioner: Mr. V. Sidharth, Advocate

For the Respondents: Mr. C. Mohan and Ms. A. Rexy Josephine Mary for M/s. King & Partridge

Case Title: P. Karthikeyan vs. The General Manager, State Bank of India & Ors.

Case Number: W.P. No. 11122 of 2021

Bench: Justice N. Mala